7 Things to Look for in an ERP System

Selecting the right enterprise resource planning (ERP) system for your business can help you streamline your operations, improve efficiency, and drive business growth.

“As enterprises strive for more efficient operations across the board, enterprise resource planning (ERP) software is an increasingly sought-after solution for improving processes at the business application level,” writes Shelby Hiter in CIO Insight. “ERP software ignites disparate back-office applications, business processes, and workflows in a single platform. It can lead to new advantages like improved data sharing, increased data quality and accuracy, and administrative visibility.”

Defining Enterprise Resource Planning (ERP) Systems

Enterprise resource planning (ERP), according to Oracle, refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

“A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results,” says Oracle. “Enterprise resource planning systems are complete, integrated platforms, either on-premises or in the cloud, managing all aspects of a production-based or distribution business. Furthermore, ERP systems support all aspects of financial management, human resources, supply chain management, and manufacturing with your core accounting function.”

While the Gartner Group was the first to use the ERP acronym in the 1990s, its roots can be traced back to 1913 when engineer Ford Whitman Harris developed the economic order quantity (EOQ) model, a paper-base manufacturing system for production scheduling.

In 1964, toolmaker Black and Decker became the first company to adopt a material requirements planning (MRP) solution that combined EOQ concepts with a mainframe computer.

MRP, and later MRP II in 1983, became the manufacturing standard. Starting in the 1990s, ERP made its way into the business lexicon and ERP systems adoption grew rapidly.

ERP Systems are the Backbone of Modern Business

CIO magazine argues that ERP systems are the backbone of modern business.

“The agility afforded by a modern ERP system backed by honed business processes can help any company compete in today’s business environment, which has been severely affected by supply chain disruptions as well as disruptions to traditional business operations due to employees working from home due to COVID,” writes Neal Weinberg for CIO. “If your organization has cobbled together point solutions or limped along with a legacy, on-premises ERP platform, it may be time to invest in overhauling how your business operates.”

Oracle says the benefits of implementing an ERP system include:

• Improved business insight from real-time information generated by reports.
  
  
• Lower operational costs through streamlined business processes and best practices.
  
  
• Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders.
  
  
• Improved efficiency through a common user experience across many business functions and well-defined business processes.
  
  
• Consistent infrastructure from the back office to the front office, with all business activities having the same look and feel.
  
  
• Higher user-adoption rates from a common user experience and design.
  
  
• Reduced risk through improved data integrity and financial controls.
  
  
• Lower management and operational costs through uniform and integrated systems.

Understanding your company needs to select an ERP system is the first step. Selecting the right ERP system for your business can be a tough chore.

“With so many enterprise resource planning options in the marketplace today, selecting a package for your business can be an overwhelming task,” says TechRepbulic. “While many companies feel that any software will work and their organizations will simply conform to the functionality of the software, widely publicized ERP failures indicate that this isn’t the best solution.”

ERP System Selection is a Transformational Business Initiative

If you want your ERP system to be a transformational business initiative that can provide your company with a competitive advantage, then look for these 7 things in an ERP system:

1. Customization: Every business has unique needs and processes, so it's important to choose an ERP system that can be customized to meet your specific requirements. Look for a system that allows you to configure workflows, reports, and dashboards to match your business processes.
2. Functionality: Look for an ERP system that can handle all the processes and functions that your organization needs, such as accounting, inventory management, manufacturing, sales, and marketing. Make sure the system has the necessary features to streamline your business operations.
3. Integration: Your ERP system should integrate with other business applications that you use, such as CRM, e-commerce, and supply chain management systems. This integration will help to reduce manual data entry, streamline processes, and provide real-time visibility into your business operations.
4. Scalability: Your business will grow and change over time, so it's important to choose an ERP system that can scale with your business. Make sure the system can handle increased data volume, users, and transactions without compromising performance.
5. Security: Your ERP system will contain sensitive business data, so it's important to choose a system with robust security features. Look for a system that includes features like data encryption, role-based access controls, and audit trails.
6. Support and Maintenance: Look for an ERP vendor that provides excellent customer support and ongoing maintenance services. You'll want to make sure that you can easily get help if you run into any issues with the system.
7. User-Friendliness: The ERP system should be easy to use and navigate. Look for a system that has an intuitive interface and requires minimal training to use effectively.

“Despite all of the benefits that can come from an ERP system, many enterprises make the mistake of selecting an ERP solution that fits poorly into their business model and goals,” warns Hiter. “All key users, applications, and daily business processes will be affected by the ERP platform you select and how your team sets it up. If your team invests the appropriate time and research into finding the right ERP system, your entire company will be set up for success as they begin to select modules and deploy the tool across different departments.”

Contact KnowledgePath today to help your enterprise successfully navigate the process of ERP evaluation and business transformation while reducing cost and risk.